The DOI matches its Crossref record; 3 of the 3 references it cites were found in a registry or an index.
The Effect of Annual Report Readability on Analyst Following and the Properties of Their Earnings Forecasts
Open accessAbstract
ABSTRACT: This study examines the effect of the readability of firms’ written communication on the behavior of sell-side financial analysts. Using a measure of the readability of corporate 10-K filings, we document that analyst following, the amount of effort incurred to generate their reports, and the informativeness of their reports are greater for firms with less readable 10-Ks. Additionally, we find that less readable 10-Ks are associated with greater dispersion, lower accuracy, and greater overall uncertainty in analyst earnings forecasts. Overall, our results are consistent with the prediction of an increasing demand for analyst services for firms with less readable communication and a greater collective effort by analysts for firms with less readable disclosures. Our results contribute to the understanding of the role of analysts as information intermediaries for investors and the effect of the complexity of written financial communication on the usefulness of this information.
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Cites
ASPECTS OF THE THEORY OF SYNTAX
Chomsky, N. (1964) · doi:10.21236/ad0616323 · Cited by 13,587
How does financial reporting quality relate to investment efficiency?
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2009.09.001 · Cited by 3,214
Linguistic complexity: locality of syntactic dependencies
Gibson, E. (1998) · Cognition · doi:10.1016/s0010-0277(98)00034-1 · Cited by 2,537
Cited by
Textual Analysis in Accounting and Finance: A Survey
LOUGHRAN, T., & MCDONALD, B. (2016) · Journal of Accounting Research · doi:10.1111/1475-679x.12123 · Cited by 2,261
Measuring Readability in Financial Disclosures
LOUGHRAN, T., & MCDONALD, B. (2014) · The Journal of Finance · doi:10.1111/jofi.12162 · Cited by 1,446
Disclosure processing costs, investors’ information choice, and equity market outcomes: A review
Blankespoor, E., deHaan, E., & Marinovic, I. (2020) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2020.101344 · Cited by 1,076
The information content of mandatory risk factor disclosures in corporate filings
Campbell, J. L., Chen, H., Dhaliwal, D. S., Lu, H.-M., & Steele, L. B. (2014) · Review of Accounting Studies · doi:10.1007/s11142-013-9258-3 · Cited by 923
Huang, X., Teoh, S. H., & Zhang, Y. (2014) · The Accounting Review · doi:10.2308/accr-50684 · Cited by 850
Metadata
- Authors
- Lehavy, R., Li, F., & Merkley, K.
- Venue
- The Accounting Review
- Publisher
- American Accounting Association
- Published
- 2011-05-01
- Volume
- 86
- Issue
- 3
- Pages
- 1087-1115
- ISSN
- 0001-4826 (ISSN-L)
- 1558-7967
- OpenAlex
- W2081416478
- Cited by
- 1,167
- References
- 3
- FWCI
- 61.90
- Type
- journal article
- Language
- en
- Open access
- green
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- Lehavy, R., Li, F., & Merkley, K. (2011). The Effect of Annual Report Readability on Analyst Following and the Properties of Their Earnings Forecasts. The Accounting Review. https://doi.org/10.2308/accr.00000043
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